Ask just about any construction firm operator, and they are likely to indicate that labor force issues are at or near the top of their concerns. Despite years of effort to attract more workers to the construction trades, the U.S. construction industry remains associated with more than 400,000 available unfilled positions.
Evidence of worker and skills shortages is everywhere apparent. Each quarter, the Construction Financial Management Association surveys its members regarding the state of the construction industry and prospects for the year to come. During the first quarter of 2024, respondents were asked about their principal challenges. Fully 71% of construction financial professionals indicated that they were extremely concerned by labor market challenges. The next leading challenge was availability of financing for projects at 24%.
At the heart of the response to worker and skills shortfalls have been the nation’s community colleges. Unfortunately, many community colleges suffered enrollment and financial setbacks attributable to the pandemic.
In many instances, enrollment was declining prior to the pandemic, in part because of a very strong labor market that induced many people to forego additional education to pursue immediate employment. According to data from the Community College Research Center, a center based at Columbia University, enrollment in community colleges in the U.S. peaked at 7.7 million in 2010. Throughout the following decade, it slowly trended downward, declining to 6.6 million by 2019. With Covid-19 shutting down many in-person education programs, enrollment fell sharply to 6.0 million students in 2020, a decline of approximately 9%. It continued to decline the following year to 5.74 million before stabilizing more recently. Despite smallish gains recently, many two-year colleges suffer meaningfully smaller student counts than prior to the pandemic.
Such circumstances can result in financial strain, with fewer students helping to finance institutional operations and capital investment. Some states have responded to lower enrollment by reducing their financial support for two-year colleges when funding is most required. In Maryland, legislators have been considering cuts totaling $22.6 million across the state’s community colleges. The proposed cuts have been justified in part by pointing to diminished enrollment and therefore less need for student support.
New Jersey’s community colleges, which enroll roughly 230,000 students, may also face budget cuts. Governor Phil Murphy recently proposed a $20 million funding cut, equal to roughly 12% of the current amount provided by the State. Chris Reber, president of Hudson County Community College, said that loss of funding, if implemented, could lead to higher tuition and possibly the elimination of some programs. The budget cuts would be a reversal from the previous year, in which the State increased funding for colleges by $20 million. That was the first increase in more than a decade, with many crediting the boost with supporting student retention rates.
The decline in community college enrollment has occurred despite its value proposition. Not only do two-year colleges tend to cost students must less than four-year institutions, but according to research from the HEA Group, which was founded by Michael Itzkowitz, the former director of the Department of Education’s College Scorecard, there are 17 associate degree major in which graduates are earning more money four years after they receive their diploma than the typical bachelor’s degree holder. Among these associate degrees is Construction Engineering Technologies, a field associated with more than $70,000 in annual compensation four years after degree acquisition. Other associate degrees in which graduates earn significant sums are engineering science, fire protection, civil engineering technicians, and construction management.
Unsurprisingly, many of the top-earning associate degree programs center around science, technology, engineering, and math (STEM). The associate degree program associated with the highest compensation is physical science technologies, which positions students for a range of technical positions, including in chemical research or radiochemistry.
A decline in community college enrollment implies fewer people pursuing such degrees, which not only robs the construction industry of much needed human capital but can also lead to a smaller American middle class. It is likely that many workers have been dissuaded from pursuing pos-secondary education, including in the skilled trades, because jobs have been so plentiful for people of virtually any skill level or set of credentials. As of this writing, there are nearly 9 million available, unfilled jobs in the U.S., or approximately 1.4 job openings for every unemployed person in America.
So Many (Other) Choices
Another factor that diminishes human capital supply in construction is the fact that today’s economy offers labor market entrants with so much choice. Were one to analyze the number of associate degrees granted by postsecondary institutions during a recent decade, one would find that the most popular fields of study are liberal arts and sciences, general studies, and humanities. While those sound interesting, they would not help someone construct a home or maintain a road.
Meanwhile, demand for construction workers continues to ratchet higher. According to the U.S. Bureau of Labor Statistics, the number of construction jobs is expected to expand by 4% between 2022 and 2032, creating just under 115,000 new positions. Filling these jobs, however, is another issue. In January 2024, the construction industry recorded 413,000 available, unfilled job openings. In February 2020, the month before the Covid-induced economic shutdown, there were 300,000 unfilled construction industry positions.
By now, the myriad issues that this presents are well known. America’s efforts to rebuild its infrastructure and industrial base are not only slowed by the lack of available talent, but such efforts are wildly expensive, diverting resources that would otherwise be invested in research and development, other infrastructure projects, or in ways that would otherwise support U.S. economic progress.
Looking Ahead
While there are other pathways into the construction industry, including apprenticeships and other mechanisms, community colleges remain an important training ground, frequently offering exposure to fields such as carpentry, electrical work, plumbing, and HVAC. In many states, local contractors work with these colleges to design programs that supply essential skills for the modern jobsite. But with community colleges facing a crescendo of emerging financial challenges, there is another reason to doubt whether America will develop the construction workforce it requires this century.